New rules implemented by the National Automated Clearinghouse Association (NACHA) allow a merchant to receive physical checks and then image the physical checks in the back office so that the data collected from the imaged checks can electronically be submitted for clearing to the Automated Clearinghouse (ACH). This eliminates the physical submission of the check instruments themselves and allows electronic files to be used for processing the settlement instead. This is convenient for the merchant and the customer in that the check can simply be obtained as payment without any additional delay. Under NACHA's rules, the merchant is required to notify the customer that the checks will be processed as an ACH transaction. However, the new rules do not require that a signature be obtained from the customer to indicate the customer's approval; all that is required is that a posted notice be given to the customer and/or a takeaway.
However, merchants are accustomed to collecting service fees on checks that are returned for insufficient funds. With the inception of electronic check processing in 1997 with Point-of-Purchase (POP) transactions, the service fees were allowed to be electronically deducted from the checkwriter's account, as outlined in the NACHA rules. However, under the Back Office Check Conversion (BOC) rules, a merchant may not electronically collect this returned check fee without first obtaining a signature from the customer, indicating the customer's agreement that the fee may be collected by the merchant. As a result, merchants will be less likely to implement this mode of processing checks since the merchants cannot readily obtain a signature from the customers and thus will lose the opportunity to electronically collect the returned check fee when applicable.
Furthermore, some merchants may not want to collect the consumer signature for every transaction, since the customer's signature is not necessary for authorizing settlement. However, such merchants will likely still want to be able to collect other customer signatures in order be able to electronically collect the returned check fee for some transactions. Essentially, some merchants would like to be able to collect consumer signatures for some transactions but not every transaction, as well as for some customers but not every customer.
Thus, there is a need for a system that can overcome at least some of the deficiencies in electronic processing of checks.